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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
26 July 2024
Keywords Studios plc
("Keywords Studios", "Keywords", the "Group")
Trading update
Keywords Studios, the global provider of creative and technology-enabled solutions to the video games and entertainment industries, today provides a trading update in respect of 2024 performance.
The Board remains confident in delivering good overall revenue growth in 2024, with performance expected to be second half weighted as the sector starts to emerge from the slower content creation trends that are currently dampening industry spend and therefore Keywords' growth.
Keywords has had a small number of larger game development projects deferred or cancelled in H1, creating capacity gaps in Create which were unable to be filled at short notice. This, together with ongoing softer demand in Globalize and the relatively slow ramp-up in content production in Hollywood, has meant that reported revenue is expected to grow by around 7 per cent. in the first half, with organic growth over the period expected to be around minus 2 per cent.
The Group has seen spend from larger clients continue to grow strongly during the first half, and anticipates a stronger recovery from the US strikes in H2, reinforcing our confidence in an improved second half performance, although further delays and project scope reductions are now expected to temper H2 organic growth from previous expectations. The Board continues to be confident in the Group's ability to outperform the market and deliver on its medium-term guidance beyond 2024.
Keywords continues to closely manage costs, taking a broad range of cost actions, including the restructuring of the go-to-market approach in Globalize set out at the full year results. Due to the timing of the cost saving programmes and the reduction of volumes, H1 adjusted operating margins are expected to be around 13 per cent., with H2 margins improving as the impact of the cost savings programmes and pick-up in volumes flow through.
There continues to be a strong pipeline of active M&A opportunities. The Group has signed a number of letters of intent with high-quality businesses, and recently completed the acquisition of a small game development studio in Australia, and a small creative design studio in the UK, as it continues to build out its offering. The Group currently expects to commit around €100 million on value accretive M&A this year, in line with its medium-term guidance.
The Group expects to post the Scheme of Arrangement documentation (the "Scheme Document") relating to the potential acquisition of the company by Houting UK Limited, a newly formed company indirectly wholly-owned by EQT's BPEA Fund VIII, in the coming days.
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This Announcement contains inside information for the purposes of the market abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").
The guidance provided in this announcement constitutes a profit forecast for the purposes of Rule 28.1 of the UK Takeover Code (the "Code") and Keywords will provide the requisite directors' confirmation statement pursuant to Rule 28.1(c) in the Scheme Document.
About Keywords Studios (www.keywordsstudios.com)
Keywords Studios is a global provider of creative and technology-enabled solutions to the video games and entertainment industries. Established in 1998, and now with over 70 facilities in 26 countries strategically located in Asia, Australia, the Americas, and Europe, it provides services across the entire content development life cycle through its Create, Globalize and Engage Divisions to a large blue-chip client base across the globe.
Keywords Studios has a strong market position, providing services to 24 of the top 25 most prominent games companies and contributing to over 70% of the 2023 Game Awards winners. Across the games and entertainment industry, clients include Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic Games, Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell, Take-Two, Tencent and Ubisoft. Recent titles worked on include Starfield, Baldur's Gate 3, Diablo IV, Hogwarts Legacy, Elden Ring, Fortnite, Valorant, League of Legends and Clash Royale. Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).
Rule 26.1
In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on the Company's website at www.keywordsstudios.com. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
Further information
The information in this announcement has not been audited or otherwise independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this announcement, or its contents, or otherwise arising in connection with this announcement.
This announcement is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction. The release, publication or distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities law of any such jurisdiction.
Certain statements, statistics and projections in this announcement are or may be forward looking. By their nature, forward‑looking statements involve a number of risks, uncertainties or assumptions that may or may not occur and actual results or events may differ materially from those expressed or implied by the forward-looking statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Accordingly, forward-looking statements contained in this announcement regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which are based on the knowledge and information available only at the date of this announcement's preparation.
The Company does not undertake any obligation to update or keep current the information contained in this announcement, including any forward‑looking statements, or to correct any inaccuracies which may become apparent and any opinions expressed in it are subject to change without notice.
References in this announcement to other reports or materials, such as a website address, have been provided to direct the reader to other sources of information on Keywords Studios which may be of interest. Neither the content of Keywords Studios' website nor any website accessible by hyperlinks from Keywords Studios' website nor any additional materials contained or accessible thereon, are incorporated in, or form part of, this announcement
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